The deadline has passed and three airlines have applied for slots. The least surprising is incumbent Delta which asked for and was given (preliminarily) two slots. More surprising was largest current slot-holder JetBlue which wanted all nine but only got three. But the biggest surprise? Southwest wants to start service at the airport. It asked for nine but only got four. Will that be enough for Southwest to start flying? It appears that way. There’s a lot of underlying strategy going on here.

Delta is No Surprise
I saw it as a given that Delta would be interested. Delta has two big jet slots today which allow it to fly CRJ-900s to Salt Lake. But it also has three commuter slots (the only 3 out of 25 at the airport which are used) which it uses to fly CRJ-700s to Salt Lake. By applying for two big jet slots this time around, Delta will have the option to standardize on larger aircraft with fewer flights. Unless Delta surprises and uses those to fly to another hub, this will just replace existing flights with bigger airplanes, leaving the commuter slots completely unused.

JetBlue Tries to Prevent Competition
Then there’s JetBlue. JetBlue has the lion’s share of slots today with 32 and it severely under-utilizes them. In the winter, it runs somewhere around 20 flights a day. That’s allowed since the rules effectively only require an airline to use slots half the time or risk losing them. But it also means that JetBlue is the one airline that could have flown to Long Beach more even before the new slots were available. And it didn’t.

So when JetBlue applies for all 9 new slots, it seems that what I said back in December is reality. “JetBlue might like to try to prevent competition by squatting on more slots.” I asked JetBlue for comment on this move.

JetBlue applied for the one-year temporary slots to enhance our 15-year history of bringing low fares and award-winning service to the Long Beach community.

We continue to be interested in offering flights to international destinations from Long Beach if and when the City requests the approval of a new Customs facility from the Federal Government.

It’s no secret that Long Beach is JetBlue’s worst performing focus city. With fuel as cheap as it is now, it probably makes money. But that hasn’t always been the case. Were I at JetBlue and I couldn’t justify utilizing all my slots, I’d be pretty scared about competition coming in and making my remaining flights perform even worse. So this has to be a defensive move. Sure, a customs facility would be great, but that’s not happening for several years, if it happens at all.

Also notice the use of the term “one-year temporary slots.” It’s true in the sense that if noise goes through the roof, then these slots would be rolled back. But that’s highly unlikely, and it’s strange to refer to the slots this way. It makes it seem like any new entrants won’t be able to maintain their service. At least, that’s how JetBlue wants it to sound.

In the preliminary award, JetBlue walked away with 3 slots. Those are 3 slots that will probably do nothing but collect dust. But it’s also 3 slots that Southwest can’t get. This is not going to curry any favor within the community. And for an airline trying to sway support for a customs facility, this is not a good move.

What is Southwest Thinking?
Now let’s get to Southwest. I’ll let my quote from back in December explain why I thought Southwest was highly unlikely to come to Long Beach.

Southwest has a very large presence at LAX (which is soon to grow when terminal work is done) and at Orange County. It would be hard to imagine Southwest showing much interest in the 9 slots at Long Beach. I’m sure it’ll take a look, but that would be a real surprise.

With a large presence at both LAX and Orange County, that leaves a pretty small catchment area around Long Beach for the airline. So why bother? There are a few possibilities here.

First, this could be the Delta strategy of wanting to blanket the metro area. Southwest is big at LAX, but it’s the biggest at Burbank, Ontario, and Orange County by far. It wants to cover the LA Basin, and Long Beach, despite not serving that unique of a market for the airline, is just another dot on the map to serve the locals.

Southwest may have tried for all 9 slots, but the preliminary award gives the airline only 4. That’s one of the smallest stations in the Southwest network and it means Southwest can’t do much. What do you do with 4 slots? My thoughts immediately wandered toward the Bay Area, Vegas, Phoenix, and Denver. Phoenix is unlikely with American already flying it up to 5 times a day. Denver is the only route with no competition on it today, but it’s also probably the weakest. Maybe it’s Oakland 4 times a day. Maybe it gets split between two markets. We’ll see.

This also could have been more of a strategic play. Does Southwest see JetBlue’s weakness as an opportunity to eliminate a player in the LA area? (LAX is a spoke; not much more.) This could be Southwest staking a claim in Long Beach as it did in Orange County. Southwest will be ready to pounce if anyone (read: JetBlue) flinches. In the meantime, it can put a little (very little) pressure on JetBlue in the market.

It’s surprising to think Southwest would even start service with just 4 slots unless it had designs on something bigger. And while Southwest can still back out, it made a big deal about this yesterday with a press release and employee town hall. It would sound pretty odd if Southwest backed away now even though it only has 4 slots.

This makes Long Beach an interesting battleground. American and Delta are happy serving their hubs and nothing more. But JetBlue has made no secret that it’ll only be happy in Long Beach if it can fly internationally. That’s an uphill battle that JetBlue probably just made tougher with this slot grab.

Meanwhile, for Southwest, this feels like the camel’s nose under the tent. But it seems to be a binary move. Either JetBlue pulls back or Southwest can’t grow. I’m sure I’ll have more to say when Southwest announces its schedule (assuming that actually happens). This is way more interesting than I thought it was going to be.

40 comments on “Southwest Surprises, Joins JetBlue and Delta in Applying For Long Beach Slots”

Is Long Beach’s local market for travelers flying regionally (the cities that you site) the same as LAX? The airports are only 20 miles apart. What does Long Beach offer the flyer that LAX doesn’t? If convenience is it, that is a lot.

I am fascinated by the type and amount of airports in the LA area. From the colossal LAX to the smaller airports with jet service, including the very quaint Burbank. It really creates a very interesting airport landscape.

Depending on where one has business in the LA area using the secondary airports in the region can really save time vs. the hassle of the massive LAX. The problem for us “east of the rockies” folks is many of the non stops into Long Beach, Burbank, John Wayne are more regional flights. Only non-stop into LA for many is LAX, which means more time sitting in LA traffic or more time connecting in places like PHX, SLC, etc.

I agree. I flew from ALB to ONT on WN last December, and proceeded to drive to Ridgecrest. From Upstate NY, the idea of driving out of LAX was scary enough. I-15 through the notch (or whatever its called out there) was horrendous in a rain storm. The downside was 3 hours in PHX, but I really appreciated the choice in airports.

I would put LGB into the category of quaint, but modern. If you live in Long Beach it’s feasible to leave home within an hour of the flight departure time (15 min drive, 5 mins to park and walk to terminal, 5 min security – or less), which is super-convenient. This makes nonstop markets a no-brainer and can tilt in favor of connections depending what time of day (traffic on the 405 and LAX congestion). The terminal is new and features lots of power, high quality local dining options and great tarmac views (not a lot of action unless you like to watch G.A.), so even if you arrive early it’s a nice airport to traverse. Also, for AvGeeks, there’s the extra bonus of boarding from the tarmac.

In LA 10 miles could take you 5 minutes or 60 minutes depending on traffic. So anything to get closer to the airport makes life more dependable. This is a good thing for competition and fares long term.

This is one of my favorite airports. I prefer to fly to LGB than any other in the area (especially if I’m going to Disneyland/staying in the orange county area). Something about how small it is and how close you can get to the jets just makes me smile.

In terms of comfort and cost, I prefer to fly Jet Blue from PDX (my home) to NYC/JFK. My choices are a red-eye non-stop or a connection in LGB. After many years of flying the red-eye to avoid a connection, I recently tried the LGB connection, and it illustrated how great it can be to connect on Jet Blue at LGB. The debarking and boarding from the tarmac gave me a chance to breathe fresh air and enjoy the sunshine, my connection was but a few steps away, and LGB had every advantage of a small airport. It was a relaxing connection, which I did not think existed anymore. Although I still will avoid connections, I will now make an exception for connecting on Jet Blue through LGB.

Maryland David – The airport dynamic out here is pretty different. LAX is the main airport and most people will go there for bigger trips. Further, nearly everyone from out of town who wants to come to the LA Basin looks to LAX as well. That’s why you see almost no long haul nonstops out of the other airports. (Sure JetBlue has a Burbank-JFK flight and Orange County has a bit more, but it’s not much.)

The value of the regional airports is more for short haul travel. If I’m flying to the east coast, my day is wasted anyway so I don’t mind the longer drive to LAX if needed. But if I’m doing a day trip to the Bay Area, Phoenix, Vegas, etc, then the local airport becomes much more important. The difference in convenience is huge at that point.

So if I’m Southwest, I can only assume the thinking is that if I can get Long Beach locals to fly me up to Oakland for my Bay Area trips, then they’ll be more likely to choose my airline out of LAX or Orange County when they fly to other places. (Doesn’t have to be Oakland, but you get the idea.)

CF,
I am quite familiar with the lay of the land, for the most part (frequent family and business trips to the area). I was just trying to get a feel for what prompts someone to use LGB over LAX. and from you and others, it definitely sounds like convenience is the big factor.

I understand that if you are visiting or live in OC than you want to try to fly into or out of SNA, and so on for the other airports.

The last time we were in SoCal we flew out of BUR. What a throwback! It felt like flying in the 1950’s. Looking at a Google map of BUR, LGB and SNA is interesting. They were obviously built when the area was nowhere near as built up as it is now. In BUR’s case it looks like you have an airport right in the middle of a neighborhood. I know they are going through a modernization, but I wonder if the land is worth more than the buildings?

Ultimately, the LA basin does not have a clear #2 (akin to perhaps EWR in NY). Perhaps that is inefficient, but as a flyer I rather enjoy the variety, and often lower fares.

Ron – Well, they send out the allocation award letters very shortly. Then it’s up to the airline to decide if they want to use the slots. If not, they have two options. They can tell the airport they don’t want them and then the airport can go out and reallocate those. Or they can just let it lapse. Once the letters are sent, airlines have to begin sale for flights using those slots within 90 days. Service has to start within 180 days of the letter being sent.

Presumably JetBlue will just do a paperwork shuffle where it just reallocates existing flights to the new slots. I’d expect Delta will also just reallocate flights from commuter slots to commercial slots. (Hopefully I’m proven wrong on both those points.)

Oliver – This isn’t the airport making unilateral decisions. There’s a process it has to follow. New entrants get 2 slots. Existing airlines get 1. So that leaves 4 to divvy up. Delta got 1 since it had only asked for 2 in the first place. Then the others got split between JetBlue and Southwest. I’m sure the airport would have loved to have given those slots to Southwest.

It seems stupid to give Jetblue 3 more slots when it fully doesn’t use what it has now. No matter the season, with so few flights that can be flown, you would think B6 would use all their current slots all the time.

WN must plan on B6 giving up on LGB if it’s willing to commit time/aircraft/money to four slots at a new location.

Southwest flies to my hometown of PNS with 3 flights/day. It took over the station from AirTrain, which served it 5x daily to ATL. Now, it has 2x to BNA and 1x to HOU daily, with some random saturday frequencies to STL and MDW. Nothing that really seems to help local passengers non-stop. This could be the strategy they employ here – Cranky, you would know better than me, but maybe while the PDEW to DEN is small, they can offer connections beyond to fill up the planes, which I guess is their plan at PNS, despite my disappointment that they didn’t do 4 cities and 10 flights, which is typically their MO when opening a new station.

Keltik – Sure, they can offer connections beyond Denver that would be fantastic. But the local market isn’t great. It’s hugely competitive out of LAX with cheap fares on a ton of different airlines. (Seriously, out of LAX it’s American, Delta, Frontier, Southwest, Spirit, and United!) If Southwest had more slots, then I’d say Denver would make perfect sense, but with only 4, there are probably better uses. Doesn’t mean I’d count it out though.

With LAX and SNA getting closer to capacity, it makes sense to serve LGB in the long term.

It will be interesting to see how B6 defends its request for additional slots. By my count, the last day they operated all 32 of their slots was September 2, 2012. Their summer 2016 schedule only shows a max of 26 departures (on some days).

I believe WN can contract out stations that have less than 12 departures a day. The theory that this is the first step in running B6 off north/south west coast flying is compelling. These two are going to have a smack down cage match in FLL soon. Kelly & Co. are wise to play to their strengths on the Left Coast before the bloodletting begins back east.

I wouldn’t be surprised to see LGB-SJC on WN. B6 ran it a while back unsuccessfully but maybe WN has the right service offering to keep it going. This is the only Bay Area/Sacramento-LA Basin/San Diego unserved route (excluding STS as an option)

Yes, please! I need to fly LGB–SJC in March, and I’d love for Southwest to fly the route (with an introductory $59 fare). But I doubt they’ll start service so soon. And I doubt they’ll fly the route at all — SFO and OAK look like more likely candidates.

As a Denver native, I’d really love to see non-stop Denver service return to LGB. As WN has really doubled-ddown on DEN, I’m hoping they’ll continue to build that market up, even with fierce competition. However none of their competition in DEN exists in LGB. Other great offering would be to Chicago or Dallas, neither of which is served nonstop from LGB and both also would be feeding major WN hubs.

Didn’t Kelly single out NoCal? They’ll probably just do all 4 slots to OAK and SFO. Maybe they’ll put one to LAS but if their new small city strategy is any indication (FNT, GRR and GSP), they’ll concentrate on one destination. Four slots is pretty small though, maybe they’ll make a fuss ala AA/DL at Haneda over jetblue’s minimum slit use in order to get more. Or maybe they won’t start at all.

This is a historic day for LGB! This will definitely force JetBlue’s hand at slots. If they don’t use them, WN will gobble them up. If WN is able to get up to 8-10 slots within the next few years, I think it will be successful. What the city doesn’t want is another lawsuit like AA did when the City made a secret deal with JetBlue. I believe the city is also afraid of anti-trust – by JetBlue hoarding all the slots and not allowing competitors in.

First of all, LGB really needs to fix their rules to prevent squatting. The requirement should be raised so that airlines are required to use their slots 80% of the time, not 50%.

Secondly, I think that B6 is planning an exit, or significant reduction, at LGB. The customs facility is just an excuse. When it doesn’t get built, they will say “sorry, since we can’t fly internationally, it’s no longer feasible to have a hub here” and scale back their flights. The hub isn’t performing well, and the planes could be better used at JFK or BOS.

The reason JetBlue isn’t performing well at LGB is probably because they have reduced frequencies and for business travelers (especially those that like to do a single day turnaround…like LGB-SEA-LGB with an early morning out and an afternoon return), which has forced moves to LAX or JFK, both of which are equidistant 19 miles from LGB. If JetBlue improved frequencies, more business travelers would use LGB. The catchment area has a huge potential.

This is an interesting situation. Since Delta will just upgrade their two CRJ700s to 900s, that won’t add much noise, and if jetBlue just sits on their three new slots, then at the end of the year, there will only be an increase of 4 slots worth of noise instead of the 9 that were determined to be available in the budget. So then the noise analysis for 2016 should show at least 5 more slots can be added for next year. So either JetBlue flys more, or Southwest will have an opportunity to gain more slots next year. Either way it’s good for Long Beach!

Rudy – That’s not how the study works each year. They take existing noise levels and then blow it up to assume 95 percent slot usage at those levels. So last year there was 60 percent utilization but they assumed 95 percent in doing the study. So it shouldn’t change until airplanes get quieter again.

Over the past several years, WN has learned the intrinsic value of slot-controlled airports (DCA, LGA, SNA). Even the $120 million they paid UA for the two gates at DAL is essentially the purchase of slots in a constrained airport, with “gates” being synonymous with “slots” in that case………The best thing about the LGB deal is that these slots are free. Didn’t cost WN a dime. And now B6 is under pressure to either operate their slots as (perhaps) money-losers or risk losing them to SWA. And, of course, LGB completes the halo around LAX for WN. They’ve got BUR in the valley, ONT to the east, and now slot-controlled presence to the south at both SNA and LGB. Putting B6 under pressure is just icing on their cake.

1js7371 – The problem is these slots at LGB aren’t worth much. There is little demand and the airport requires a fare discount. Most slot controlled airports produce a fare premium, so it’s a good indicator that there’s just not huge demand here. It’s a shame, but maybe Southwest can figure out a strategy that will change that. I’ll believe it when I see it.

Well, I guess that’s why they are free! But remember, for WN it’s all about the network……… On the other hand, maybe they just did it for YOU, Mr. Cranky. Your “Trip Reports” have real street cred within the industry and maybe they want their fair share :-) My guess is they will have Herb Kelleher himself do an “Across The Aisle” with you, just to see if you fawn all over him ala Doug Parker.

I’m surprised. As JetBlue controls the large majority of flight slots they are in control in several ways. If they decide to fly their slots to full capacity the noise bucket level increases…competition (newer slots) gone. Or how about some late night flights? All Blue has to do is fill the bucket to avoid competition. I’m not sure how much money it takes to start up service but these new users are sitting at a high stakes card game with JetBlue holding all the trump cards.

Mike – That’s not how it works. The study to determine how many slots should be added takes existing noise levels and then extrapolates noise based on 95 percent usage of the slots. JetBlue can fly as much as they want and it’s not going to kill these slots. What could JetBlue do to have these slots removed? It could buy some MD-80s, but then there’s another problem. The loudest noise polluters lose their slots first if they need to cut back. JetBlue have little it can do here.

Long Beach-Atlanta would be a perfect mission for the new CS300 from Bombardier. Not gonna happen (not any time soon, for sure), but shows how it seems that aircraft could be deployed very effectively.

Your email address will not be published. Required fields are marked *

Comment

Name *

Email *

Website

Please type "969bcf":

Leave this field empty please:

Continue the conversation via emailGet only replies to your comment, the best of the rest, as well as a daily recap of all comments on this post. No more than a few emails daily, which you can reply to/unsubscribe from directly from your inbox.